El Salvador will privatize or close the cryptocurrency wallet “Chivo” created by President Nayib Bukele when he made bitcoin legal tender in 2021, an official said Thursday. The announcement came after the Central American nation’s government reached a $1.4 billion loan deal with the International Monetary Fund that addressed its controversial embrace of bitcoin. While bitcoin remains legal tender in El Salvador, Chivo will be sold or wound down, Stacy Herbert, director of Bekele’s National Bitcoin Office, wrote on social media platform X. She did not say how many people used the digital wallet, which was created by the government in September 2021 for Salvadorans to make payments in bitcoin. El Salvador will continue buying bitcoin (at possibly an accelerated pace) for its Strategic Bitcoin Reserve,” Herbert added. The IMF said Wednesday that under the loan agreement, acceptance of bitcoin by the Salvadoran private sector would be voluntary, adding that bitcoin-related risks “are being mitigated. For the public sector, engagement in bitcoin-related economic activities and transactions in and purchases of bitcoin will be confined,” it added.
In 2021, El Salvador became the world’s first country to establish bitcoin as legal tender in a bid by Bukele to revitalize a dollarized, remittance-reliant economy. On December 1, the gang-busting leader acknowledged in a speech that the introduction of bitcoin had been “the most unpopular measure that this government has taken. Around 88 percent of Salvadorans did not use bitcoin in 2023, according to a survey by the Central American University. According to the National Bitcoin Office, El Salvador owns 5,969 bitcoins worth around $582 million. “Legal reforms will make acceptance of Bitcoin by the private sector voluntary. For the public sector, engagement in Bitcoin-related economic activities and transactions in and purchases of Bitcoin will be confined. The deal, which is aimed to help support El Salvador’s economy, still needs to approved by the IMF’s executive board. The IMF had opposed the Salvadorean President Nayib Bukele’s crypto-friendly policies, warning they could become an obstacle to it offering financial assistance. Still, Bukele celebrated on social media as bitcoin rallied after Donald Trump’s US election victory in November. Earlier this month, as the price of bitcoin topped $100,000 for the first time, Bukele said in a social media post that his country’s holdings in the cryptocurrency had more than doubled in value. He also blamed his political opponents for causing many Salvadorans to miss out on bitcoin’s rise. The cryptocurrency has rallied since Donald Trump’s election victory on the 5 November. The incoming Trump administration is seen as being far friendlier towards cryptocurrencies than President Joe Biden’s White House. The cryptocurrency retreated along with global stock markets after the US Federal Reserve signaled a slower pace of interest rate cuts next year.
Bitcoin is currently trading at around $100,000. Bitcoin has been on a dream run since Donald Trump was elected the next U.S. president, driving the cryptocurrency to record highs day after day. The big rally has piqued the interest of luxury brands, who are now looking to offer crypto as a form of payment. The price of Bitcoin crossed the $100,000 mark earlier this month and is on an upward trajectory to $110,000 in anticipation of Trump’s pro-crypto policies. Niche luxury companies, such as French pen-maker S.T. Dupont, are moving fast to offer crypto payments in two of its Paris stores before the holidays. Printemps, a French department store, will soon accept the digital currency as payment. The head of Binance France, the French unit of the world’s largest crypto exchange, acknowledged that there was more interest overall, including from luxury players.
